How to avoid growing pains

A plan for company expansion needs to describe who you want hire and what you’ll want them to do

Mimecast’s Peter Bauer said half his recruits proved to be unsuitable (Timmy Henny)

Rapid growth is exciting but can also be an enormous headache, not least when
it comes to hiring the people needed to cope with it.

The first step should always be to take a clear-eyed look at exactly what is
behind the new success, said Simon Mosey, director of the Institute for
Enterprise and Innovation at Nottingham University Business School.

“Has a competitor closed down? Have you gained a new market you had not
expected? Have you done better than expected internationally? You need to
move away from the notion that everything you do is great. You need to
identify what you are doing that is bringing this growth.”

Once you have done this you will be able to focus the resources you already
have and get a more accurate picture of what you need in your new people. If
you are going for growth in manufacturing, say, you will need a few more
managers (lack of managerial capacity is one of the big restraints on
growth), and, if you need more people, you should have a clear idea of the
skills they require, said Mosey.

Don’t start recruiting until you have a clear idea of who you want and what
you expect them to do, said Jennifer Price, a consultant at the search firm
Archer Mathieson, “A business needs a clear plan for how it is going to
grow,” she said. “It has to anticipate the people it will need to get to
where it wants to be, and the people it will need when it is there.”

For example, the business may need someone junior in a particular department,
but if it knows it will need someone more senior in two years that can be
factored in to the job hunt. “Sometimes you need to over-hire for the
immediate need to make sure you have the right person for the next stage,”
she said.

Price recommends using interim managers as a way of buying more time before
hiring. “The interim can act as a Band-Aid while [the business] is given the
time to find the right long-term solution,” she said.

This is the approach that Lumesse, an HR software firm, took when a management
buyout combined with rapid growth meant it had to double the size of its
finance team. Three interims took care of the immediate needs while the
search for permanent staff went on, said Matthew Parker, the chief
executive.

Mosey said: “If you just throw people at [a business], it is very difficult
for them to keep the ethos that made you successful enough to grow in the
first place. You also have to show them that ethos and provide a sense of
structure.”

Without a clear shared ethos the business itself can be threatened, said
Damian McKinney, chief executive of McKinney Rogers, a consultancy that has
had 40% year-on-year growth since he founded it 12 years ago.

When McKinney started out he just assumed that everyone he worked with shared
his approach to business, so he did not draw up a formal statement of
values. After 18 months, however, he realised that it might be useful.

“I did the hideous flipchart exercise and we [all the staff] worked together
to come up with four values,” he said. “I looked at them and thought, oh, I
don’t think they are right, but I did not want to say that because I did not
want to be too imposing.”

That attitude changed when he showed the statement to a client. “He said,
‘Let’s have dinner and talk about the contract. If that’s what you are going
to become, I’m cancelling the contract. I did not employ that. I employed
what you stood for and what I thought your company stood for’.”

McKinney then rethought the values statement, brought it back into line with
what he had started with and now makes sure that everyone he hires buys into
it.

Raj Tulsiani, chief executive of Green Park, an interim management recruitment
consultancy that has doubled in size in six months, has also learnt this the
hard way. In the early days of his five-year-old business he hired people
with a focus on financial performance, but found this threatened the values
of the firm.

“They were employed by us but their mentality was that of sole traders, so
they made money but they did not share our vision and values,” he said. They
have now moved on.

“If I were doing it again I would have that focus on shared brand and values
and make sure that pay underpins this rather than focusing on the finances
ahead of other things,” Tulsiani said. “We want people to build profits ...
but it has to be done in a way that is aligned with our values.”

Sack them quickly if they don’t fit

Capco has grown from 80 people to about 300 in just over a year and is showing
few signs of slowing down. “We are always recruiting for technology and
business consulting skills and we are recruiting at all levels,” said Isabel
Naidoo, a human capital director at the consultancy.

The biggest challenge is finding the “high-calibre talent” that the company
wants to recruit. Techniques include a “double bounty” month to encourage
staff referrals and a coffee van at London’s Liverpool Street station
proclaiming that commuters might like to exchange their daily grind for a
job at Capco.

“Recruiting is particularly challenging in the early stages when you have no
brand and it’s harder to show talented people why they should show up [at an
inter- view],” said Peter Bauer, chief executive of Mimecast, the email
management firm that is on the Sunday Times Tech Track 100 list of
fastest-growing companies.

“We have about 250 people now but to get there we have probably hired 500,
half of whom did not work out,” he said.

“A start-up company is a voyage of discovery. You have to be prepared to
experiment with hirings. You also have to be prepared to get rid of people
fast if they don’t work out.”

The ratio of successful hirings has improved, Bauer said, partly because new
people now work with managers who have been promoted internally rather than
everyone being new.